Dormant Company in Indonesia: How to Stay Compliant, Avoid Fines, and Make Smart Move in 2025

Introduction

A Dormant Company in Indonesia refers to a legal entity—typically a Perseroan Terbatas (PT or PT PMA for foreign ownership)—that has ceased operational or commercial activities but has not been formally liquidated or dissolved. While inactivity may seem harmless, especially for foreign investors who’ve paused their ventures temporarily, the reality is far more complex under Indonesian law.

For foreign-owned companies (PT PMA), being classified as dormant doesn't exempt them from ongoing legal, tax, and compliance obligations. In fact, failing to meet these can trigger financial penalties, tax audits, blacklisting, and even forced liquidation by the Ministry of Law and Human Rights or the Directorate General of Taxes (DJP).

Many business owners mistakenly believe that if a company is inactive—i.e., not generating income, hiring staff, or signing contracts—it can simply be left untouched. However, Indonesia’s legal framework treats company existence as continuous unless officially terminated. Dormancy, if not managed properly, can lead to cascading legal consequences over time.

As of 2025, Indonesian regulators are tightening oversight on dormant or inactive companies. This is partly in response to post-COVID investment policies and a national effort to clean up the business registry and enforce transparency in foreign investment. Understanding how to manage, reactivate, or properly dissolve a Dormant Company in Indonesia is now more important than ever.

What Qualifies as a Dormant Company in Indonesia

A Dormant Company in Indonesia is generally understood to be a company that is legally registered but not currently engaged in business operations. This can include no active revenue generation, no payroll activity, no contracts, and no employee engagement. However, there is a critical distinction between the legal definition of dormancy and the practical interpretation under Indonesian regulations.

Legally, Indonesia does not have a formal “dormant company” status like in some other jurisdictions (e.g., Singapore or the UK). Under tax law and BKPM/OSS (Online Single Submission) regulations, a company remains active until it is officially deregistered—even if it has zero operations. This means it is still required to fulfill monthly and annual tax reporting obligations, update its business license status (NIB and other permits), and comply with labor and corporate filings.

Simply having no income or no transactions does not exempt a business from filing reports. A common misconception is that if a PT or PT PMA is not generating revenue, it can skip tax filings or avoid BPJS reporting. In reality, the Directorate General of Taxes (DJP) still expects a zero report (laporan nihil) for dormant companies, and failure to comply can result in automatic penalties or tax status downgrade (e.g., to Non-Effective Taxpayer).

Examples of companies that may appear dormant—but are not treated as such—include:

• A PT PMA that holds a business license but is waiting for permits
• A company that owns land, property, or trademarks but has no income
• A shell entity used for future business expansion

In all these cases, the company is not considered dormant from a regulatory perspective and must continue reporting as if it were active. Understanding the true nature of a Dormant Company in Indonesia helps avoid unintentional non-compliance and long-term legal complications.

Legal Responsibilities of a Dormant Company in Indonesia

Even without active business operations, a Dormant Company in Indonesia must still fulfill several legal and administrative responsibilities. Failure to meet these obligations can result in hefty fines, legal complications, or eventual revocation of the company’s legal status.

1. Monthly Tax Filings

All registered companies, including those classified as dormant, are required to submit monthly tax reports. This includes:

• PPh 21 (employee income tax) – Required even if there are no salary payments; a zero report must be filed.
• PPh 23 (service tax) – If no service payments were made, NIL filing still applies.
• VAT (PPN) – Mandatory for VAT-registered entities, even if there were no transactions.
• PPh Final – This must be reported monthly for certain tax types, such as rental income or final taxes on sales.

Neglecting to submit these reports—even if there are no transactions—can lead to automatic tax fines ranging from IDR 500,000 to over IDR 1,000,000 per month.

2. Annual SPT Tahunan

A Dormant Company in Indonesia must still file the Annual Corporate Income Tax Return (SPT Tahunan Badan). This includes full financial statements, even if the company has had no income or expenses.

3. BPJS Ketenagakerjaan & BPJS Kesehatan

If your company still has any registered employees—even if they are not actively working—you must continue reporting to BPJS (Social Security and Health Insurance). Failing to report changes in employment status can result in penalties and backdated premium obligations.

4. BKPM’s LKPM Reporting

PT PMAs must submit Investment Activity Reports (LKPM) every semester—even if there is no activity. BKPM views non-reporting as non-compliance, which can jeopardize the validity of your business licenses.

5. OSS NIB and Business License Status

A Dormant Company in Indonesia that remains inactive too long without reporting risks having its NIB (Business Identification Number) and other permits revoked. The OSS system automatically flags inactivity, which can trigger audits or deregistration.

Remaining compliant—despite being inactive—is crucial to protect your company’s legal standing and avoid escalating issues with tax and investment authorities.

Risks of Keeping a Dormant Company in Indonesia Without Compliance

Operating a Dormant Company in Indonesia does not mean you are exempt from the law. In fact, maintaining a dormant status without fulfilling your legal obligations can result in serious financial, legal, and reputational consequences.

1. Tax Fines and Penalties

One of the most immediate risks is administrative penalties due to late or missed reporting. Even if your Dormant Company in Indonesia has no revenue or transactions, you're still required to submit NIL tax reports monthly and annually. The fine for each late submission starts at Rp 500,000 per tax report—a cost that can quickly add up over several months. Repeated non-compliance can also trigger a full audit by the tax office.

2. Revocation of Legal Status by OSS/BKPM

The Online Single Submission (OSS) system and BKPM (Ministry of Investment) monitor company activity closely. If your company fails to file LKPM reports, or appears inactive for too long, its Business Identification Number (NIB) and licenses can be revoked. This makes it legally impossible to resume operations, sign contracts, or even sell the company until rectified.

3. Impact on Visas and KITAS

Foreigners holding business visas or KITAS (limited stay permits) under a Dormant Company in Indonesia may encounter problems. Immigration authorities cross-check business activity and tax filings. An inactive company could raise red flags, resulting in visa extension denials, additional scrutiny, or even blacklisting.

4. Reputational Damage

If you intend to reactivate your business, bring in investors, or sell the company in the future, a poor compliance history can reduce your company’s value and credibility. Legal due diligence will reveal outstanding issues—making it harder to build trust with partners or buyers.

For any Dormant Company in Indonesia, staying compliant—even when inactive—is not just a legal formality. It’s a smart, long-term business decision that protects your rights and your options for the future.

Step-by-Step: How to Report Dormant Company Status Properly

Even if your business is inactive, maintaining proper compliance is essential to avoid penalties. Here’s a practical guide to help you report the status of a Dormant Company in Indonesia accurately and efficiently.

1. File NIL Tax Reports via DJP Online

A Dormant Company in Indonesia must still submit monthly tax filings, even with zero transactions. These are referred to as NIL reports. Log in to your DJP Online account using your company’s NPWP credentials, and submit the necessary forms for:

• PPh 21 (employee tax)
• PPh 23 (services, if applicable)
• VAT (if your company is VAT-registered)
• PPh Final (e.g., for rental income or other applicable scenarios)

Be sure to file on time—by the 20th of each month—to avoid automatic fines.

2. Update BPJS Employment Status

If your Dormant Company in Indonesia no longer has active employees, you must update the employee status through the BPJS Employment system. This involves:

• Deregistering employees who have resigned or been terminated
• Reporting zero active payrolls

Failing to update BPJS can still result in monthly premiums being charged and audited.

3. Submit LKPM Reports via OSS

Even if the company is not operational, BKPM regulations require a semi-annual LKPM (Investment Activity Report). You can log into the OSS system and mark your status as “not yet operating” with explanations provided. This keeps your NIB and investment licenses valid.

4. Appoint a Legal or Tax Proxy

If you are overseas, appointing a trusted tax or legal consultant as your proxy is highly recommended. They can handle monthly filings, employee status updates, and LKPM reporting on your behalf—ensuring your Dormant Company in Indonesia stays fully compliant.

In short, managing a dormant business doesn’t mean doing nothing. It means keeping your records clean and your filings up to date, so you retain legal standing and operational flexibility in the future.

Strategic Options for Dormant Companies: Sell, Reuse, or Liquidate

Once your business enters dormancy, it’s important to evaluate whether to keep it, reactivate it, sell it, or shut it down. Each option has its own legal, financial, and strategic implications. Understanding the best path forward can save you time and money.

1. When to Keep It Dormant

Maintaining a Dormant Company in Indonesia can be strategic if you plan to restart operations in the future, preserve licenses, or reserve a registered business name. This is especially useful if you’re waiting for permits, capital, or the right timing to enter the market. As long as you comply with monthly and annual reporting requirements, keeping the company in dormancy can be low-risk.

2. Selling a Dormant Company

If you're not planning to return, selling your Dormant Company in Indonesia to another investor is a viable option. The benefit here is that the buyer can fast-track their entry into the Indonesian market using an already established legal entity. However, full due diligence is critical to ensure there are no hidden liabilities.

3. Risks of Shelf Companies or Shell Entities

Be cautious: while some see a Dormant Company in Indonesia as a “shelf company,” authorities are increasingly scrutinizing inactive entities due to potential misuse for tax evasion or illicit purposes. OSS and BKPM can revoke your business licenses if your company is inactive too long without reporting.

4. Repurposing for New Ventures

Another option is to repurpose your dormant company for a new line of business. You’ll need to update the KBLI business classification, amend the deed (if necessary), and notify OSS/BKPM. This saves time and avoids the complexity of setting up a new PT PMA.

Choosing the right strategy for your Dormant Company in Indonesia depends on your future goals, current liabilities, and regulatory risk appetite.

How to Close or Liquidate a Dormant Company in Indonesia

Closing a Dormant Company in Indonesia requires a formal legal process known as voluntary liquidation. While the company may no longer be active, it must still fulfill a series of legal and financial obligations before officially ceasing to exist. Here's how to do it properly.

1. Voluntary Liquidation Process

The first step is to hold a General Meeting of Shareholders (GMS) to decide on the dissolution of the Dormant Company in Indonesia. A licensed notary will then formalize the resolution and begin the liquidation process. The appointed liquidator will manage the settlement of debts, asset distribution, and final reporting.

2. Legal and Public Announcements

The liquidation must be announced in two widely circulated Indonesian newspapers within 30 days of the GMS resolution. This gives creditors the chance to submit claims. The liquidator is responsible for settling outstanding liabilities, including taxes, unpaid employee compensation, and BPJS obligations.

3. Notifications and Government Filing

The notary submits the liquidation documents to the Ministry of Law and Human Rights. If approved, the ministry will update the company’s status to “in liquidation” in the online system. Upon completion, another filing is required to confirm that the Dormant Company in Indonesia is officially dissolved.

4. Estimated Costs and Timeline

The full closure process can take up to 6 months and costs typically range from IDR 25 million to IDR 50 million, depending on the complexity and size of the business. A standard document checklist includes:

• Liquidation deed
• Final tax clearance letter
• Newspaper announcements
• Financial statements
• BPJS clearance
• Creditor settlement proof (if applicable)

5. Final Obligations Before Closure

Before dissolving a Dormant Company in Indonesia, all tax obligations must be reported and paid (including a final nil report if applicable). Any remaining assets should be distributed according to the company’s Articles of Association. BPJS and OSS accounts must also be closed or deactivated properly.

By completing this process transparently, you reduce the risk of future liabilities and demonstrate responsible business conduct—even when winding down.

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